Look at the bond yields

ForexZig.comOctober 31, 2012

Bond market

In our previous article, we observed the need to follow some other markets, different from the one that you are trading on. This could be useful for a particular trader, in defining and predicting the movement of the exchange market.

So, believe it or not, currency and bond markets are very closely related. And this is our first suggestion.

The direction of both investment assets is heavily dependent on the economic environment in the country and the monetary policy. If the economy shows strength, global investors will buy bonds that are offered by the particular country – always looking for stable and high levels of returns. This will lead to increased demand for the currency of the country, thereby assessing the value of the currency. Global investors that are interested in investing in the country and in its infrastructure, will always have to deal with the currency. They go hand in hand.

This is the reason why money managers look for short-term graphics bond yields to confirm the formation of the currency market trend. The movement of one asset could be able to predict or confirm the movement of another.